Can we please bag this idea that it’s somehow a “compromise” in any meaningful sense if we temporarily extend all the Bush tax cuts, including the ones for the rich? Come on. It’s really capitulation. Temporary capitulation, perhaps, but capitulation all the same…
…There is a way a one-year or two-year temporary extension could represent a compromise of sorts: If Republicans signal a willingness to at least entertain the idea of letting the high end cuts expire after that temporary extension. But many of them aren’t doing that. Their position is that the high-end cuts need to be made permanent. Full stop. And that’s fine: That’s their position. It’s understandable that they would stick to it.
In case the president didn’t get the message from the results of the midterms, it’s time to play some chicken. No more “compromising” on the fundamentals. Yes, he will need to be realistic about what can be accomplished, and a little is better than nothing in most cases. But when it comes to the tax cuts, let the Republicans make everyone’s taxes go up. They won’t do it. They’ll cave. And you’ll get off to the right start in dealing with these bastards. You’ll let them know who is in charge.
No extensions of ANY tax cuts. Let them all expire. If you are a Democrat that lost your seat, why should you vote to help out the rich with more tax cuts? The rich just ousted your ass from Washington. For the middle class, the tax cuts are peanuts. Who cares about those? It’s the tax cuts for the rich that need ending.
Too late for that. He’s already promised, and repeated that promise many times. They’d kill him with that. As for extending the tax cuts for the rich, though, even if the repugs can ram it through, Obama can just veto it. I don’t see how that could be a minus.
I have no faith they will do anything but capitulate so for the last few months I have been hoping for no action so that all the tax cuts expire.
it’s virtually invitable. capitulation is what democrats do best,
overall, l’m in agreement with you and boo on letting the tax cuts expire. it’ll put the rats intransigence on public display if properly messaged.
additionally, calling the middle brackets’…or even more so the lower brackets’…tax cuts peanuts is absurd. to wit, via bloomberg:
so, the lowest three brackets will see a tax increase in their taxes of: 50%, 87%, 24%, respectively; while the upper two brackets are looking 9% and 10%…nic capital gains and dividends increases, which apply across the board…and the estate tax, which isn’t worth discussing, imo.
given the fact that the median family income is ± $52,000, and the tax rate break points falling where they do, that’s a lot of pain.
ergo, the rats failing to cooperate will create serious repercussions for a very large majority of taxpayers who are already in dire straits.
the only way the administration loses on this deal is if they allow the rats to paint the blame for the aforementioned pain squarely on the democrats…which given their track record the past two years, is not unlikely.
we shall see.
…to follow your advice.
…or so I have come to believe. May he prove me wrong!
Idiots
THese people are idiots. Does anyone know shit about negociation?
It’s one thing to negotiate on the stimulus when you whip votes early on and see they aren’t there.
It’s quite another to have all the power in your hands that if you do nothing, the tax cuts end.
I’m not holding my breath. I think the “compromise” will be to keep all taxcuts until 2012 and then Obama will say something like “I disagree but that’s what elections are for and the folks can decide then.”
I used to think the thing that drove people on the left crazy about Obama were his policies- compromising too much, watering down stuff, etc. but its really not. What drives people crazy are his politics- the lack of fight, the professorial “do what’s fair and reasonable” rather than fight for the people who can’t fight for themselves. And at the same time, I get it why he hasn’t gone full combative. Like Luke in Jedi, he doesn’t want to go to the dark side, he doesn’t want to take a swing at McConnel because that’s exactly what they want him to do- lose his cool, become an angry black man who’s fighting for welfare moms and illegal immigrants.
I don’t understand why Obama has to do all the talking. If it’s a Democratic position, there are lots of people who can put forth the position — and show as much fight as they like.
He has learned nothing. Come on Obama do the correct thing not the “extreme right” thing.
This is like dropping one payer and then giving away the public option in negotiations. Why is he so afraid? We can’t do much worse in an election.
The Fed has started the second round of Quantitative Easing (printing money). The stagflation that results will be blamed on Obama. Tax the stagnant money sitting in the upper two percent’s pockets. Put it to work for the economy.
Stagflation. Horrific! We’ve been there before.
Stagflation. Not is Paul Volcker has a say. He bailed us out of stagflation from the 1970s and Ronald Reagan took the credit. And Carter was a one-term President because he started the pain.
Stagflation is not likely until consumer demand picks up or credit eases.
Right now all that money is going into T-bills which allows the Treasury to restructure the national debt to lower interest rates.
And savers get the shaft. Even long-term CDs are have almost no interest.
I see your point except that commodities remain high even during slow growth. Look at what the oil market does on any small increase in demand or decrease in supply. Precious metals shot up again today too.
They say deflation is what the Fed is worried about but we are increasing the money supply with the QE2 stuff. There is little expansion and money supply is supposed to expand where it matches growth plus inflation. We are increasing far more then that now.
I hope your right but I have a feeling we will see it if the economy picks up at all.
Volcker threw the economy into the worst recession we had seen since the depression by raising interest rates sky high (until this great one). That killed all demand thereby killing inflation. This time it will be money supply. How do you reduce money supply? Obviously I’m just playing amateur economist here on the Tribune. Where is Zandar1 when you need him?
I like good old fashion stimulus this Quantitative Easing stuff makes me nervous. Something to keep an eye on.
People has this simplistic view of the quantity theory of money, which the Real Business Cycle theorists and Austrians pimp, that in no way matches reality. The fact that the monetary base is increasing hugely doesn’t mean it has the impact on demand that will lead to a corresponding increase in prices.
Again, it increased hugely in Japan, and prices still fell. Why? Because there weren’t worthwhile investments to make, and consumers didn’t/couldn’t spend to lift demand.
So thats why Bernanke is doing Q.E. he sees very little risk as the danger of inflation as very small?
I’m still a bit freaked out by the idea.
Drew check out this link:
http://www.economicpopulist.org/content/qe2-binge-inflation-horizon
I’m reading it now.
Check out comments by Robert Oak at bottom. Its his blog and I get the feeling he does not see it as risky as the deflation alternative.
The more I read the less I know.
OK one more link. I think this is the one Calvin was referring to earlier.
Bernanke from WP
I feel a bit better after reading it.
You should feel better about the almost-nonexistent possibility for hyperinflation. You shouldn’t feel better about our chances of getting out of the liquidity trap, because Bernanke can’t do that on his own. QEII was basically Bernanke coming out and acknowledging that the politicians are crippled and doing what he can to try to prevent deflation while hoping the economy firms up.
Bernanke knows we’re running out of stimulus. He’s trying to push the dollar lower to spur our exports, get businesses borrowing again and put in place expectations of higher inflation. If he can’t do those things, simple GDP math tells you we’re going to stagnate and slip into deflation, at which point even with robust fiscal policy it’s going to be tough to get out.
There wasn’t anything interesting in the link. It’s the same tired horseshit they produce at sites like Zero Hedge. Except Zero Hedge at least offers the extra layer of horseshit about the BLS “conspiracy” to underreport inflation (by confusing assets in M3 with money and prices), while clearly not knowing how the BLS actually goes about calculating inflation.
The guy who runs the site seems to agree with you.
Thanks for checking it out.
The key relationship is between the production of goods and services and the money supply. Real supply-demand mismatches over the short term like commodity prices tend to be self-correcting unless there is inflation elsewhere in the economy. Inflation and deflation are mismatches in the supply of money and the supply of goods and services demanding the use of that money. Constrained supply and to much money–inflation. Too little money–deflation.
Volcker had little other options without significant taxes to draw off the extra money. It was a hangover from the Vietnam War, oil shocks, and the ending of Nixon’s disastrous wage and price controls (that seems only to control wages). It was definitely shock therapy. Had Carter been re-elected he would have had to deal with the recession part without reigniting stagflation.
The difference between then and now is that then there was too much demand for the available goods and services. Now there is too little demand.
You are right that old-fashioned stimulus (FDR’s pump-priming fiscal programs) are more effective in stimulating demand that Quantitative Easing would be. Banks can sit on the money (in the form of T-bills) until demand recovers. And it kills the motivation to save.
There are several ways to reduce the money supply. You can tax it, a sort of blunt tool that is hard to time properly. You can do Quantitative Tightening, reversing the decisions that Bernanke just made. You can have the Fed buying and selling T-bills that it holds in its own account – an “open market” operation. The trick is to have a clear idea of the growth in production of goods and services and the real size of the money supply (which is complicated by the way that derivatives and foreign currency trades can create money beyond the control of the Fed).
TarheelDem,
I think it’s very possible that Carter lost largely because of the Iran hostage affair. The rumors that Reagan en Co. made a deal with Tehran to keep the hostages until after the election have never been corroborated. Anyway, if I’m not mistaken, the hostages were released about an hour after Reagan’s assumption of the presidency.
Also if I’m not mistaken Paul Volker is credited with ending the sky-high inflation. The interest rate of 13 percent was just part of the pain, which no one in the country is ready to impose or accept today. Then the recession and the recovery. Like Iraq and Afghanistan, Vietnam was war which no one thought had to be paid for with increased taxes. But this time around the situation is much more dire.
Carter appointed Volcker. If folks had been more economically secure, they might have been patient with Carter’s negotiations. The evidence for the Reagan campaign team’s violation of the Logan Act is circumstantial. It has to do with (1) the roadblocks Carter began to run into as the campaign heated up, given his commitment not to campaign until they were released; (2) the strange timing of the release; (3) the fairly rapid decision of the Reagan administration to sell arms to Iran.
You are right about the pain of paying for the Afghanistan and Iraq wars. Essentially Nixon punted the problem to future administrations with his silly wage and price control program, which would have worked had it an rationing be implemented and enforced from the escalation of the Vietnam War. But that was politically impossible for a “police action”. LBJ did finally put a tax surcharge in place in the late 1960s. It is as progressive as the underlying bracket structure and deductions. It’s too bad that we can’t tax just Republicans for these wars.
There won’t be any stagflation. Has no one read about Japan?
Yes, but have you seen oil and commodities lately? Did you read what “B-52” Ben wrote in the Kaplan Post this morning?
Bernanke’s fooling himself with his belief in the wealth effect having a great impact. Again, Japan tried it. It failed. Prices continued their downward trend. Just as they are here, despite QE.
He’d literally be better off dropping money out of helicopters.
I don’t think oil has much to do with Bernanke. I think it has a lot more to do with demand being unable to keep up with supply.
What other commodities? Gold is a bubble, in my opinion. Corn prices have gone up because of a bad harvest.
Monetary actions are all Bernanke has to work with. I don’t think he is naive enough to believe in the wealth effect. He most likely knows that monetary policy can’t do what needs to be done.
But Congress stands in the way of using additional fiscal actions to stimulate demand.
Thats the problem.
True to an extent, I think. That’s why he told Congress not to cut spending when he testified earlier this year. But I still think he overestimates the power of monetary policy through buying Treasuries. The wealth effect isn’t that large, particular when targeting people who own substantial amounts in stock.
He’s not stupid by any stretch, and he should still try whatever he can.
Calvin do you have a link?
I don’t know if you’ve seen this link before:
What The F*** Has Obama Done So Far
In case anyone forgot…
Congressional gridlock works in our favor on this one. There are two years left to provide a middle class tax cut. One way to do it would be to eliminate the Social Security cap on income subject to tax and lower the payroll tax to, say 7%.
I love Michael Moore’s idea – start passing those 420 bills that are held up in the Senate.
That would be real fun to watch.
The problem is that the president isn’t in charge. The Congress is an equal branch of government.
If the tax cuts have to continue to get the UI extension, so be it.
The Republicans in the Senate can still block the legislation.
It is not smart to rile Republicans now. It would backfire on Obama. Angry black man.
The way to undermine them is to be cooperative and them blame them.
The Republicans should shut up until January. They will dig themselves into a hole.
Obama doesn’t have to get angry. He has to change his rhetorical position though.
I agreee. I think he will do that come January. It’s too soon to say much. Let the Repubs do all the blustering.
I expect that in the end that congress will pass an extension, probably permanent, of all the Bush tax cuts. The republican house will initiate it, at least a few democratic senators will go along, and there won’t be enough progressives in the senate to filibuster.
At that point, it will come to Obama. I would love, love, love it if he would veto it, letting all the tax cuts expire, and putting us on the road to fiscal sanity. It would make him a 1-term president, but it would be so good for the country that it would be worth it.
However, I don’t expect this. Having promised that he won’t raise taxes on the bottom 95%, he will keep his promise, sign the bill, and say that it was too too bad, but he couldn’t let the people suffer just because those mean republicans wouldn’t compromise. At that point, I will vow never to vote for him again.
A few years afterwards, the country will go into default, and all hell will break loose.
My advice to the President is to tell the Republicans to go fuck themselves. Bill Clinton did only one thing that made me very happy. Two hours after the impeachment vote was taken he threw a little party on the White House lawn – he and his supporters giving the Republicans the finger:
I remember feeling very proud of that group standing together on the lawn. I also remember the Republicans response to it. They were APOPLECTIC.
Only in the world of self-loathing Democrats does “open to having a discussion” equal “capitulation.” Its nice to see how easily we rush to embrace bullshit framing, though.